LG Chem plans to have half of its business in batteries and information materials by 2015, based on the belief the sectors will lead the firm to join the ranks of global top-tier companies.
“Our business focus on batteries and information materials will be increased to become on par with our petrochemical division,” Kim Bahn-suk, vice chairman and CEO of the nation’s leading chemical company, told The Korea Herald.
Petrochemical products currently make up about 70 percent of the company’s business. This ratio will be adjusted to 50:50, Kim said.
LG Chem CEO Kim Bahn-suk
He has every reason to believe in the marketability of the electric car battery industry, for which the mounting pressure to roll out eco-friendly cars amid a global warming crisis will prove a big boon for business.
The market is now expected to reach 5.8 million electric cars a year by 2015, up from the current 1.6 million.
The market for lithium batteries used in electric vehicles will consequently grow to be worth about 8 trillion won by 2013, and further to 16 trillion won by 2015, which is when LG Chem hopes to secure up to one quarter of the global battery market share.
“The projections for the car battery market vary, but ultimately, they all point up,” Kim said, adding that the business will be become a significant pillar for profit at LG Chem.
Experts believe the market has the potential for even bigger growth, particularly by 2020, when up to one-quarter of all cars sold globally will be hybrid cars including automobiles charged electrically.
LG Chem, under the guidance of Kim, has been making strides in new areas of business including the battery industry.
Technological breakthroughs were largely behind the business progress, leading to record-breaking profits.
Last year, the company’s net profit reached an all-time high of 2.2 trillion won ($2 billion) after growing more than 40 percent from 2009.
LG Chem also is offering its technological prowess to other affiliates, such as the films it provides to LG Display to manufacture film-type patterned retarder panels for 3-D televisions.
Personnel, however, was another factor in the success, according to Kim, who has successfully turned the company around since he took office in 2006 based on his business philosophy of “Speed Management.”
“In 2006, LG Chem’s sales were growing, but its profitability was deteriorating. So the management and I decided on a “speed management” strategy that basically called for increasing the pace of our business and the changes in our people by two-fold, respectively, to bring up performance four-fold,” Kim said.
He urged employees to become more efficient in core areas of competence, and become more flexible in those less so.
“Ultimately, we sought ‘earlier’ preparation, ‘faster’ results and ‘more frequent’ checks than our competitors,” he said, looking back on the past five years.
Kim’s vision earned him the full support of LG Group Chairman Koo Bon-moo, who advocated Kim’s vision by allocating investments and understanding the need to develop and create new business opportunities.
Based on robust R&D support, LG Chem expects to become capable of producing enough batteries to supply up to 350,000 cars a year by 2013.
The investments are already paying off, as reflected in the spiraling number of pre-orders from top carmakers such as Chevrolet, the maker of the electric car, Volt.
“And we have plans to make further investments to establish plants overseas whenever the timing seems to be ripe,” Kim said.
By Kim Ji-hyun (firstname.lastname@example.org